Omron 2003 Annual Report Download - page 37

Other investments are stated at the lower of cost or estimated net realizable value. The cost of securities sold is
determined on the average cost basis.
Inventories
Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation of property, plant and equipment has been com-
puted principally on a declining balance method based upon the estimated useful lives of the assets. The estimated
useful lives primarily range from 3 to 50 years for buildings and from 2 to 15 years for machinery and equipment.
Goodwill and Other Intangible Assets
In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business
Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the pur-
chase method of accounting be used for all business combinations completed after June 30, 2001. SFAS No. 141
also specifies the types of acquired intangible assets that are required to be recognized and reported separately
from goodwill. SFAS No. 142 requires that goodwill no longer be amortized, but instead tested for impairment at
least annually. SFAS No. 142 also requires recognized intangible assets be amortized over their respective estimat-
ed useful lives and reviewed for impairment. Any recognized intangible asset determined to have an indefinite useful
life is not to be amortized, but instead tested for impairment until its life is determined to no longer be indefinite.
The Companies adopted the provision of SFAS No. 141 and SFAS No. 142 on April 1, 2002. In connection with
the transitional goodwill impairment evaluation, SFAS No. 142 required the Companies to perform an assessment of
whether there was an indication that goodwill was impaired as of the date of adoption. This initial test resulted in no
goodwill impairment charges. Other intangible assets were amortized on a straight-line basis over the expected
useful lives principally up to 5 years.
Long-Lived Assets
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.” SFAS No. 144 provides a single accounting model for long-lived assets to be disposed of. SFAS No. 144
also changes the criteria for classifying an asset as held for sale; and broadens the scope of businesses to be dis-
posed of that qualify for reporting as discontinued operations and changes the timing of recognizing losses on such
operations. The Companies adopted SFAS No. 144 on April 1, 2002. The adoption of SFAS No.144 did not have a
material impact on the operating results or financial position of the Companies.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to undiscounted cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of other than by sale
are considered held and used until disposed of. Assets to be disposed of by sale are reported at the lower of the
carrying amount or fair value less costs to sell.
Advertising Costs
Advertising costs are charged to earnings as incurred. Advertising expense was ¥7,196 million ($59,967 thou-
sand), ¥7,931 million and ¥8,796 million for the years ended March 31, 2003, 2002 and 2001, respectively.
Shipping and Handling Charges
Shipping and handling charges were ¥7,300 million ($60,833 thousand), ¥7,342 million and ¥8,027 million for the
years ended March 31, 2003, 2002 and 2001, respectively, and are included in selling, general and administrative
expenses in the consolidated statements of operations.
Termination and Retirement Benefits
Termination and retirement benefits are accounted for in accordance with SFAS No. 87, “Employers’ Accounting
for Pensions” and are disclosed in accordance with SFAS No. 132, “Employers’ Disclosures about Pensions and
Other Postretirement Benefits.” The provision for termination and retirement benefits includes amounts for directors
and corporate auditors of the Company.
Annual Report 2003 • 35